Am. Econ. Ins. Co. v. Traylor/Wolfe Architects, Inc., Case No. 3:12-cv-1094-J-32JBT

CourtUnited States District Courts. 11th Circuit. United States District Court of Middle District of Florida
Writing for the CourtTIMOTHY J. CORRIGAN United States District Judge
Decision Date06 August 2014
PartiesAMERICAN ECONOMY INSURANCE COMPANY, Plaintiff, v. TRAYLOR/WOLFE ARCHITECTS, INC., a Florida corporation, RICKY LANE TRAYLOR, an individual, and PATRICK WHELAN, an individual, Defendants.
Docket NumberCase No. 3:12-cv-1094-J-32JBT

LANE TRAYLOR, an individual, and PATRICK WHELAN,
an individual, Defendants.

Case No. 3:12-cv-1094-J-32JBT


August 6, 2014


The plaintiff insurance company in this declaratory judgment action moves for summary judgment because it believes the automobile accident at the heart of the underlying state court action is not covered by its insurance policy. Plaintiff separately moves to exclude the expert testimony offered by one of the defendants on the grounds that the expert is unqualified to provide the opinion offered and that the opinion is unsupported by the facts. Only one defendant opposes the motions, the individual injured in the accident. The defendant argues that the facts do implicate coverage and that its reliable expert testimony helps prove that.

The Court held a hearing on these motions on June 12, 2014, the record of which is incorporated herein. (Hr'g Tr., Doc. 38.) Upon review of the parties' submissions and oral arguments, the applicable law, and the record, the Court rules as follows.

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On July 31, 2012, Patrick Whelan filed a personal injury lawsuit against Ricky Lane Traylor and Traylor/Wolfe Architects, Inc. ("Traylor/Wolfe") in the Circuit Court for the Fourth Judicial Circuit in Duval County, Florida relating to a March 7, 2011 automobile accident involving Whelan and Traylor. (Compl. ¶ 8, Doc. 1.) Whelan alleges in his state court complaint that Traylor negligently operated his 2004 Ford Expedition by making an improper left turn in front of Whelan as he was driving his motorcycle, causing the front of Whelan's motorcycle to strike the side of Traylor's vehicle and resulting in personal injuries to Whelan. (Id. at 10-11.) Whelan brings one count for negligence against Traylor and another count for negligence against Traylor/Wolfe based on its alleged vicarious liability for Traylor's negligence as its employee. (Id. at 11-12.) Plaintiff American Economy Insurance Company filed this declaratory judgment suit against Traylor/Wolfe, Traylor, and Whelan seeking a declaration that it had no duty to defend or indemnify either Traylor/Wolfe or Traylor under a business owner's insurance policy it issued to Traylor/Wolfe. (Id. at 2, 8.)

American Economy now moves for summary judgment, arguing that there can be no genuine dispute that it is not obligated under the "Hired Auto and Non-Owned Auto Liability" endorsement and amendatory endorsement to the policy to provide either a defense to Traylor/Wolfe or Traylor in the underlying lawsuit or indemnity for any damages from the accident. (Mot. for Summ. J., Doc. 22; Reply to Mot. for Summ. J., Doc. 32.) Whelan responds that the allegations in the state court complaint and the actual facts developed in discovery do support coverage or at least create a genuine issue of fact preventing the entry of summary judgment for American Economy.

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(Resp. in Opp'n to Mot. for Summary J., Doc. 27.)


"When the only question a court must decide is a question of law, summary judgment may be granted." Saregama India Ltd. v. Mosley, 635 F.3d 1284, 1290 (11th Cir. 2011). "The interpretation of an insurance contract is a question of law." N.H. Indem. Co. v. Scott, 910 F. Supp. 2d 1341, 1344 (M.D. Fla. 2012) (quotations omitted). "Summary judgment is appropriate in declaratory judgment actions seeking a declaration of coverage when the insurer's duty, if any, rests solely on the applicability of the insurance policy, the construction and effect of which is a matter of law." Northland Cas. Co. v. HBE Corp., 160 F. Supp. 2d 1348, 1358 (M.D. Fla. 2001) (citation omitted).

Even though American Economy has moved for complete summary judgment in this case, and only Whelan, not Traylor or Traylor/Wolfe, has responded, the Court cannot simply enter summary judgment against a party as unopposed, but must still consider the merits of the motion and the evidence submitted in support to determine whether summary judgment is appropriate. Mann v. Taser Int'l, Inc., 588 F.3d 1291, 1303 (11th Cir. 2009).


American Economy contends that neither the allegations of the underlying state complaint nor the facts revealed in discovery establish any duty to defend or indemnify on its part. (Doc. 22 at 1-2.) The underlying state complaint alleges that Traylor was an executive officer of Traylor/Wolfe and the owner of the 2004 Ford Expedition at the time of the accident, which, American Economy claims, are enough to exclude

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him from qualifying as an insured under the terms of the Hired Auto and Non-Owned Auto Liability endorsement and to establish that there is no duty to defend. (Id. at 9-10; Doc. 32 at 3-4.) American Economy further argues that the actual facts demonstrate that, contrary to the allegations in the state complaint, Traylor was not using the vehicle for a business purpose at the time of the accident, which would also mean he is not an insured and would move the vehicle outside the definition of a "non-owned auto" covered by the endorsement. (Doc. 22 at 11-20; Doc. 32 at 4-10.) Thus, according to American Economy, it has no duty to indemnify either Traylor/Wolfe or Traylor and any prior duty to defend it might have had would cease once it is held to have no duty to indemnify. (Doc. 22 at 9; Doc. 32 at 1.)

In response, Whelan urges the Court to limit its focus to only the allegations in the state complaint and the language of the policy. (Doc. 27 at 6-7, 10.) In his view, the allegations establish that Traylor, not Traylor/Wolfe, owns the vehicle and that he was using it in the course of his work for Traylor/Wolfe at the time of the accident. These allegations sufficiently fall within the language of the policy to trigger a duty to defend, particularly because, in Whelan's view, the policy exclusion of owners of hired and non-owned autos does not apply to an executive officer like Traylor. (Id. at 8-9.) But if the Court must look beyond the state complaint at the actual facts, Whelan argues that there is at least a genuine issue as to whether Traylor was using the vehicle in connection with the business of Traylor/Wolfe.1 (Doc. 27.)

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A. Duty to Indemnify

The parties agree, and the case law confirms, that Florida law applies to this diversity insurance contract case. (Doc. 22 at 7; Doc. 27 at 5); Hartford Accident & Indem. Co. v. Beaver, 466 F.3d 1289, 1291 (11th Cir. 2006). Florida law provides that an insurer's "duty to defend an insured is determined solely from the allegations in the complaint against the insured, not by the true facts of the cause of action against the insured, the insured's version of the facts or the insured's defenses." State Farm Fire & Cas. Co. v. Steinberg, 393 F.3d 1226, 1230 (11th Cir. 2004) (citation omitted); Nat'l Union Fire Ins. Co. v. Lenox Liquors, Inc., 358 So. 2d 533, 535 (Fla. 1977). The duty to indemnify, on the other hand, "is not determined by the allegations in the complaint, but is instead controlled by the actual facts of the underlying lawsuit." Scottsdale Ins. Co. v. GFM Operations, Inc., 789 F. Supp. 2d 1278, 1285 (S.D. Fla. 2011) (citing Underwriters at Lloyds London v. STD Enters., Inc., 395 F. Supp. 2d 1142, 1147 (M.D. Fla. 2005)); State Farm Fire & Cas. Co. v. CTC Dev. Corp., 720 So. 2d 1072, 1077 n.3 (Fla. 1998).

American Economy has thus far offered a defense under a reservation of rights in the underlying state court action, but contends in its motion that it has no duty to defend or indemnify. Citing to an accurate statement of Florida law that the duty to defend is gleaned from the four corners of the complaint in the underlying action, Whelan suggests that the Court look no further.

It is true that, under Florida law, for there to be a duty to indemnify, there must first be a duty to defend. Wilson ex rel. Estate of Wilson v. Gen. Tavern Corp., 469 F. Supp. 2d 1214, 1218 (S.D. Fla. 2006). But even if there is a duty to defend, it "does

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not continue indefinitely" and cuts off once "it is certain that the claim is not covered by the policy at issue." Scottsdale Ins. Co., 789 F. Supp. 2d at 1284. "Put another way, 'the duty to defend ceases when it is shown that there is no potential for coverage, i.e, when there is no duty to indemnify.'" Id. (quoting Underwriters at Lloyds London, 395 F. Supp. 2d at 1146 and citing Sinni v. Scottsdale Ins. Co., 676 F. Supp. 2d 1319, 1329 (M.D. Fla. 2009); First Specialty Ins. Corp. v. 633 Partners, Ltd., 300 F. App'x 777, 777-78 (11th Cir. 2008)).

Discovery in this case is over, and the record is complete. Thus, the Court now must determine if the "actual facts" establish that American Economy has an obligation under the policy to indemnify either Traylor or Traylor/Wolfe.2 If it does, it must, of course, continue to defend. But if there is no duty to indemnify, American Economy's duty to defend ceases as well.

1. The Insurance Policy

American Economy issued Business Owners policy number BP-761449-3 to Traylor/Wolfe with a policy period of August 27, 2010 to August 27, 2011. (Doc. 1 at 14-101; Doc. 1-1.) The policy...

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